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The top five reasons sales fail (and how to avoid them)

By Trulia | Published: Oct 14, 2009 | 19 Comments

Selling a home can often be one of the most emotionally draining events in a person's life. Where a seller might be swinging from the rafters with glee one day at having finally found a buyer willing to write an offer, they can be drowning in tears the next when the buyer withdraws from the sale. Losing a real estate sale is depressing. So how can you avoid having your home sale fail?

The answer is to know what escrow icebergs to watch for so you can steer clear of disaster. To help, let's explore the top five reasons sales fail (and how to avoid them):

  1. Lack of commitment (buyer's remorse)

    Buyers remorse is the psychological backlash from making any major purchase, the little voice in the back of a buyer's mind that says - Is this really a good idea? Buyers suffering from buyer's remorse will often begin to pick the home apart, scrutinize inspection reports more carefully, and look for reasons to withdraw from the sale. To combat this natural tendency, savvy sellers and their agents continue the selling process throughout escrow. They do this by reminding the buyer why the home is a good value. This might include the benefits and features the home offers, the advantages the home provides over the competition, or the superior location and neighborhood amenities. In addition, wise sellers request that buyers make a substantial earnest money deposit to demonstrate their commitment to the sale.

  2. Low appraisals

    Whether they deserve it or not, appraisers have taken a lot of heat concerning the real estate market meltdown. Because of this they, and the banks they represent, are much more conservative when it comes to establishing fair market value which often results in low appraisals. To avoid a deal breaking low appraisal, sellers and their agents should be prepared to defend their price by meeting with the appraiser at the home and providing the list of comparable sales that were used to establish value. In addition many homeowners have found it useful to point out remodeling, construction, and amenity details that might not be readily apparent.

  3. Poorly written contingencies

    Almost every home sale is subject to conditions or contingencies. These are the points that a buyer or seller must resolve during escrow in order to successfully close the transaction. For instance, a common condition of sale is the acceptance of an inspection report or the review of a preliminary title report. The challenge with addressing conditions within escrow is that, if they have been poorly written or do not include a specific deadline for completion, it can quickly lead to disaster. To avoid a problem, be sure that all parties in the transaction have a clear understanding about the meaning of the condition and a clear deadline as to when the condition will be removed or resolved.

  4. Inspection reports

    An inspection report can be a "deal killer" if it reveals a problem the buyer was unaware of before they made an offer, or if the report itself was written in such a way that it gives a buyer the wrong impression about the overall condition of the home. To avoid a nasty surprise, many sellers choose to have a pre-inspection prior to marketing their home for sale. By doing so they can address any issues revealed by the inspection in advance and be able to provide a "clean" report to the buyer. The only downside to this approach is that any items revealed during the inspection will need to be disclosed to the buyer whether they are fixed or not.

  5. Missed deadlines and poor communication

    Often the biggest challenge to closing escrow isn't the home, appraisal, or inspection reports, but rather the people. People problems, including poor communication skills and missed deadlines, can create escrow challenges that can easily kill a sale. To avoid this fate, decide in advance a schedule of communication with all parties involved in the transaction. For instance, a conference call with all the players every Monday might be one way to keep everyone focused on moving escrow forward to a successful conclusion. In addition, map your deadlines on a calendar and be sure to extend any dates that can't be hit.

Don't allow your sale to fail! Many sales on the brink of failure can be saved if the seller and their agent take the time to attack these issues early.

Comments

By Nick Alameddin,  Thu Dec 24 2009, 16:58
I believe the most crtical item in the list should be a truly qualifed buyer. In this day and age, lenders are very picky on giving out home loans. Make sure your agent did his/her homework to make sure that the buyer will not have any issues getting the loan.

Nowadays, many sellers agents require that a buyer be qualifed by their own lender.
By Johnny Yankoviak,  Sat Mar 20 2010, 16:04
Also, some sales just weren't meant to be.
By Michael Russell,  Sat Mar 20 2010, 22:58
I have not allowed a seller to brow beat my buyer client into preapproving with the sellers chosen lender. That's poorly looking out for a clients interest. I have also always advised my clients about the dangers of a.r.m.s. Also I advise my clients not to stretch themselves out financially buying at the very top limit of their preapproval amount. At the end of the day the buyer can choose whichever lender they want to be preapproved and close a deal with, it's America! Some deals WILL fall through that's life. We just try to minimize that occurance with quality processes that a client can use successfully. I don't think you have any legal ground as a seller or sellers agent to constrict a buyer to be preapproved with a lender of your choosing. I could be wrong but I'm telling you that you have restricted your pool of buyers and thats contrary to your sellers best interest.
By Ann Howell,  Sat May 1 2010, 04:16
Regarding "Remorse": Each person involved in the transaction has a goal that he/she is trying to reach. The collective goal is to have the transaction succeed and have each party come out with a "Win". The seller, even if reluctantly selling, will experience an outcome at the end that will allow them to move on to seeking another goal. The buyer will obtain an asset or lifestyle that will meld into reaching additional goals. Each service provider in the transaction (Loan Officer, Escrow Officer, Inspectors, Insurance agents, . . .) is seeking to enhance their business by providing essential outcomes in the transaction. The Real Estate agent(s) orchestrates the interaction of each of these players as the transaction moves forward. Always keeping the big picture in mind, being resolution oriented and assuring that each step is professionally handled by all will keep the transaction on track. And, yes, communicate, communicate, communicate - in a positive and efficient manner.
By Todd Bostwick,  Mon Jun 21 2010, 09:17
Communication is key - after purchasing a 2nd home in the worst economy since the Great Depression, these tips made the sale happen for my family.

1> YOU (the buyer or seller) have to be technically and technologically savvy. Know how to get to your email and perferably a fax machine at work and at home, this is critical. Know about Word docs, PDF's and keep up the pressure through to closing on all parties. Almost ALL the documents that were signed prior to closing, were done electronically, not at the real estate office.
We did not pay the buyer anything, no points, no fees, nothing (ReMaxGrande). The seller (bank) did pay our buyers agent (approx. $3500) on a $130,000 home (appraised at $315,000) which we purchased using a HUD FHA 203 k (one of the best ways to get a new home, do improvements and not have to have 20% down on a home)
2> MANY homes are on the books of banks and credit unions. THEY DO NOT want to lose more than they already have, esp. if it's a foreclosure so make sure to have your PreApproval certificate from your lender before even looking at a house. Ask the bank or CU directly about houses, many of which are posted on their websites, usually through local real estate agents.
We looked at 20+ houses in Michigan, and after we found the "one" went back to look at the others we looked at and ALL of them sold (houses are selling more than folks who aren't looking would be led to believe).

3> If you already own a home, DO NOT use the same mortgage company as your first property. There are laws, restrictions and many of these actually prevent you (the seller and buyer of a new home) from having as much flexibility on your side as is needed in this market. Most require the 1st property to go to market immediately and usually under their guidelines, timelines and not on your agenda. Some of these can be extremely costly, and only moreso if you're moving a great distance or to another state.
This can be a tremendous burden esp. if you cannot travel or visit the selling home until it's sold

It's a buyer's market and really, a sellers market with the right people working for you - there'll be no other time like this in your lifetime as housing prices will eventually creep back upward over time.
By Mike Seo,  Mon Aug 9 2010, 05:34
Basically , if we value and take our customers seriously, we won't loose them.
By Fran Rokicki,  Thu Nov 4 2010, 13:41
Buyers, in this market, need to be cautious of the new banking regulations. Having open communication with their agent, their banker and their attorney's office, is very important. If any fears arise, they will be taken care of immediately. When the fear escalates, it becomes a problem.
By Elliott R. Oliva,  Tue Dec 14 2010, 08:45
I can't stress enough the importance of having a comprehensive loan Pre-Approval on purchase transactions. Our industry is very dynamic and in constant change so it's is unwise to assume/imply anything these days.

A good lender needs to be preemptive during the pre-approval process and take an underwriter's perspective.

"What are the problems?"
"Why would I approve this file?'
"Why would I deny this file?"

Of course a full pre-approval needs to be done, not just a pre-qual. Here is a description of an ideal Pre-Approval:
http://www.elliottoliva.com/preapprovedvsprequalified
By Karen Parsons-Fiddler,  Tue May 3 2011, 09:06
I'd add bad loan approvals....or pre-approvals. Some just aren't realistic and the deal fails due to financing.
By cindy kaiser,  Wed Nov 2 2011, 17:00
great advise! sellers should be aware of expectations on the buyers side< such as credit towards closing cost, inspection reports which would scare anyone into not buying your house, and low appraisals. based on my experience I highly recommend an independent appraisal and inspection to counter the one the buyer will come to the bargaining table with. your own appraisal and inspection report will allow you to list at a reasonable price and prepare you for making good decisions regarding accepting offers and know what to expect down the line. Good luck and best wishes.
By Shawn Rosa,  Tue Dec 13 2011, 10:40
excellent article. these are definitely the prime deal-killers.

perhaps buyer's remorse is #1 and inspection results are #2
By Elena Talis,  Sat Apr 7 2012, 09:58
Finding a professional to guide you through the process is of the most importance. An experienced agent will explain the potential pitfalls and will guide a consumer around them. In our area, it is common to have inspections upfront before putting a house on the market. But the buyers still try to run their own inspections and renegotiate the price at removal of contingencies. I guess 4 and 5 would be the most common in our area.
By Matie,  Tue Jun 26 2012, 05:49
Estate agent(s) orchestrates the interaction of each of these players as the transaction moves forward. Always keeping the big picture in mind, being resolution oriented and assuring that each step is professionally handled by all will keep the transaction on track. And, yes, communicate, communicate, communicate - in a positive and efficient manner.

http://www.indexpost.com/
By Kevin Richey,  Wed Dec 25 2013, 09:25
These are some very helpful tips, thanks for sharing them.
By Carmen Brodeur- Top 1% Realtor,  Tue Jan 14 2014, 07:04
Poor communication is so frustrating. I make it a point to stay in constant contact with all parties of a transaction.
By Allen and Tonia Flores,  Wed Mar 5 2014, 23:08
There's an older comment about "I have not allowed a seller to brow beat my buyer client into preapproving with the sellers chosen lender. That's poorly looking out for a clients interest" As a listing agent all offers are vetted by, but not forced to use, my preferred lender regardless of the bank who completed the pre-approval (qualification) we had a buyer's agent provide an invalid pre-qual and proof of funds which locked up our seller's listing with extensions for 45 days since our horse was already hitched to the buyer's wagon. I have seen buyer's put money to show proof of funds and then after the statement closes the money goes back to the person who lent it. Unfortunately, with the sheer number of unethical agents out there cross qualification is a fact of life.
By hbdexteriors,  Mon Mar 10 2014, 11:43
Will Rogers said, " good experiences comes from good decisions and a lot of that comes from bad decisions". I called Tonia Flores out of the blue because of a article Tonia wrote in Trulia. Tonia had several great insights into the world of real estate that you only get because of Tonia's own unique experiences. I do not know Tonia personally but she was helpful, thoughtful,honest, and genuine in her discussion with me. Thank you Tonia Flores for your time, and your unique experiences in the world of real estate.
Harry D. Hillsboro, Oregon
By Andrew Abram,  Mon Apr 7 2014, 07:02
Nice tips and so i take care of this.
By Samantha Freeman,  Tue Apr 22 2014, 09:53
Timeshare resales are a legitimate business, but the difference between a straightforward timeshare resale company and a scam is when the company claims to sell your timeshare at an unrealistic price. Remember, if it’s too good to be true is a scam: http://www.timesharescam.com/blog/126-how-to-sell-a-timeshare/

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